5th Annual Tax Thread - 2007

[Qacer]

Originally posted by: Qacer
I'm trying to understand the education deduction portion of a tax return.

Here is a scenario:

John Doe receives a 1098-T form from school. The only section (box) that has a monetary value attached to it is "Box 2 - Amounts billed for qualified tuition...". Let's say it is showing $1600. All his education fees including books were paid using student loans. He also took out some money from his student loans for living expenses. On top of that, he had a full time job, but didn't do tuition reimbursement. Let's say he was pursuing his Master's degree.

On his school account charges for 2007, it is showing the following:

Spring 2007
Description - Charges
Books - $200
Check for living expenses - $1500
Other school fees - $200
Tuition - $150
Tuition - $600
Tuition - $600
Tuition - $100
Total charges - $3350

Summer 2007
Description - Charges
Books - $150
Check for living expenses - $500
Other school fees - $200
Tuition - $600
Tuition - $600
Tuition - $100
Total charges - $2150

All charges were paid using student loans. Based on these numbers, what would be the qualifying tuition & fees amount that can be used for his education deduction calculations?

Thanks again!

I think I may have found an answer to my question. I was reading IRS Publication 970: http://www.irs.gov/publications/p970/. In it, it had some examples that made things a bit clearer.

For the quoted scenario, I have to exclude the charges for Books and Check for living expenses when calculating the fees paid for education. Since the student is in graduate school, the HOPE credit does not apply. However, the Lifetime credit can be used.

I also need to take into account the adjusted gross income to find out what percentage of the Lifetime credit can be used to reduce the income tax. The value (box 2) in form 1098-T does not really play into the calculations because according to Pub 970, those values may not necessarily match the actual educational expenses.

 

[DOTC]

I'm in a situation were my tax refund is going to my ex for back pay child support. The IRS website states I will be getting my return on the 18th. At what point does it change status to show that it will be directed to her.. if it will say anything at all?

 

[EagleKeeper]

Originally posted by: DOTC
I'm in a situation were my tax refund is going to my ex for back pay child support. The IRS website states I will be getting my return on the 18th. At what point does it change status to show that it will be directed to her.. if it will say anything at all?

My guess is that the IRS looks at/updates the status of the refund - not the direction of travel.

 

[DOTC]

Ok, cause it justs says my refund is good, and I should get it by the 18th.. figured it would say held, or $0 refund.

 

[themisfit610]

Here's a question.

I did my W-4 incorrectly for last year (I think). I claimed myself, and another allowance for head of household. I didn't know what that meant but it doesn't apply to me.

Now on my federal return I don't claim head of household (of course), and I'm getting VERY little tax returned. ~300 for ~$40k of income.

Help!

~MiSfit

 

[marmasatt]

I can add to the child support one and then ask one of my own.

I'm in a situation were my tax refund is going to my ex for back pay child support. The IRS website states I will be getting my return on the 18th. At what point does it change status to show that it will be directed to her.. if it will say anything at all?

I'm not positive, but I don't even know that it changes at all. Basically you are "certified" meaning the state's child support agency has sent over your ssn to intercept your refund. The IRS processes your return (calculations and what not) and it gets all the way through the process. But at the very end, when they see you have a lien, they will send you a notice advising that you have been "offset" by another agency. And you will have the contact number to call the folks who've put the lien on you. So my guess is it will be updated right when they are about to send it, or not at all and you will just get the notice in the mail because they "tried" to refund you but couldn't.

Now onto my question.

My wife and I have 3 depds. We raised my standard deductions on my state and fed W-4's from 3 to 5 last year. Well somehow, we're still getting back $4,000 and change it looks like this year. We're a one income family and I could sure use that money during the year. So I followed the directions on the W-4's and literally tried to hand in a W-4 for "11" and my payroll person stated she'd never seen that before. She basically gave me a "wink" and told me I'll be paying by the end of the year if I did that. I don't understand. If I wan't more money back throughout the year, is it not as simple as continuing to raise my deductions? Should I pick something in the middle like 8 or use one of the charts that I'm sure are out there.....Or should I use the science and the numbers of it? Thanks.

 

[EagleKeeper]

Originally posted by: themisfit610
Here's a question.

I did my W-4 incorrectly for last year (I think). I claimed myself, and another allowance for head of household. I didn't know what that meant but it doesn't apply to me.

Now on my federal return I don't claim head of household (of course), and I'm getting VERY little tax returned. ~300 for ~$40k of income.

Help!

~MiSfit

You dug your own hole.

You had the money during the year - what is your complaint.

If you want to do both, collect some dependants for this year.

 

[EagleKeeper]

Originally posted by: marmasatt

I can add to the child support one and then ask one of my own.

I'm in a situation were my tax refund is going to my ex for back pay child support. The IRS website states I will be getting my return on the 18th. At what point does it change status to show that it will be directed to her.. if it will say anything at all?

I'm not positive, but I don't even know that it changes at all. Basically you are "certified" meaning the state's child support agency has sent over your ssn to intercept your refund. The IRS processes your return (calculations and what not) and it gets all the way through the process. But at the very end, when they see you have a lien, they will send you a notice advising that you have been "offset" by another agency. And you will have the contact number to call the folks who've put the lien on you. So my guess is it will be updated right when they are about to send it, or not at all and you will just get the notice in the mail because they "tried" to refund you but couldn't.

Now onto my question.

My wife and I have 3 depds. We raised my standard deductions on my state and fed W-4's from 3 to 5 last year. Well somehow, we're still getting back $4,000 and change it looks like this year. We're a one income family and I could sure use that money during the year. So I followed the directions on the W-4's and literally tried to hand in a W-4 for "11" and my payroll person stated she'd never seen that before. She basically gave me a "wink" and told me I'll be paying by the end of the year if I did that. I don't understand. If I wan't more money back throughout the year, is it not as simple as continuing to raise my deductions? Should I pick something in the middle like 8 or use one of the charts that I'm sure are out there.....Or should I use the science and the numbers of it? Thanks.

If you use tax S/W, temporarily remove a dependant and see what the change is.
Now put the dependant back.
Lets call the change in refund (delta).

Now divide the current refund by the delta. That will determine the number of dependents you can increase your W4 safely. If you exceed that limit, you MAY have a tax due next April.

I would not recommend that you submit a W4 with more than 9. It used to be that a payroll was required to notify the IRS of such. The IRS would then flag the taxpayer for potential computer audit of payroll taxes paid vs total amout owed at the end of the year.
If they determine that the amount that you should have been paying quarterly through withholding was well under, then penalties could be assessed for underwithholding.

 

[Mears]

In April '07 I bought a house. All of the property taxes are rolled into my Escrow. My mortgage company provided me a year end statement and it looks like they are making a full payment this month and another full payment in April. Is this normal? Since both payments are taking place this year (even though "my" payments were over the course of '07), am I not able to deduct any property taxes?

 

[EagleKeeper]

Originally posted by: Mears
In April '07 I bought a house. All of the property taxes are rolled into my Escrow. My mortgage company provided me a year end statement and it looks like they are making a full payment this month and another full payment in April. Is this normal? Since both payments are taking place this year (even though "my" payments were over the course of '07), am I not able to deduct any property taxes?

Contact them for clarification.
Taxes are paid when the check is cut to the local government - other than that, you are just placing it into an account for payment.

Many times, the tax payment is paid in advance. Check your closing statements - prorated taxes may be included there.

Remember to look at the closing sttement closely for anything that is stated as government related fee or labeled as a tax plus the points (if any) These are all deductible.

 

[pinoy]

Just a couple of questions:

1. I heard that PMI paid for 2007 is now deductible. Is this true?

2. My wife and I donated a goods (toys, bikes, clothes, etc.) to Salvation Army on several ocassions (we always asked for receipts). Is there a site where we can get an idea the value of goods we donated?

TIA!

 

[EagleKeeper]

Originally posted by: pinoy
Just a couple of questions:

1. I heard that PMI paid for 2007 is now deductible. Is this true?

2. My wife and I donated a goods (toys, bikes, clothes, etc.) to Salvation Army on several ocassions (we always asked for receipts). Is there a site where we can get an idea the value of goods we donated?

TIA!

IRS - FAQ

Can you deduct Private Mortgage Insurance (PMI) premiums on rental property? If so, which line item on Schedule E?

Yes. You can deduct Private Mortgage Insurance premium on line 9 of Form 1040, Schedule E (PDF), Supplemental Income and Loss. Write "PMI" on the dotted line.

Only for Rental Property



I have not heard of any place.

A good rule of thumb is 30% of the new value.

 

[Ramma2]

First thanks for doing this thread each year!

My question: We paid about $1500 in 2007 to send my 5 year old to all day kindergarten. From what I gather from TurboTax, it looks like we can't claim that as an education expense, because it is not a higher education.

Is that true? If so why does that suck so very very much?

 

[EagleKeeper]

Originally posted by: Ramma2
First thanks for doing this thread each year!

My question: We paid about $1500 in 2007 to send my 5 year old to all day kindergarten. From what I gather from TurboTax, it looks like we can't claim that as an education expense, because it is not a higher education.

Is that true? If so why does that suck so very very much?

The daycare does not fall under the higher education credits - key word, HIGHER EDUCATION.

However, if you and your wife worked, there is a child care credit that you can take.
Tax S/W will ask if you had day care expenses for a dependent.
If so, you select the dependent, enter the tax id of the provider, address and amount paid.
The credit is a sliding scale.

 

[davestar]

i did my taxes a couple weeks ago, e-filed, and got my returns. however, i just received a form (I forget the name... 1099???) that says i earned $11.85 in dividends from one of the stocks that i own. oops.

what should i do? ignore it because it's such a small amount? append it to my 2007 taxes somehow? thanks.

 

[EagleKeeper]

Originally posted by: davestar
i did my taxes a couple weeks ago, e-filed, and got my returns. however, i just received a form (I forget the name... 1099???) that says i earned $11.85 in dividends from one of the stocks that i own. oops.

what should i do? ignore it because it's such a small amount? append it to my 2007 taxes somehow? thanks.

Unlce wants his money!

You need to fill out a 1040X and an updated schedule D

Which ever S/W you used should asist you in preparing the forms.

This and other posters prior to you are examples on why you do not rush into filing until the time frame for ALL forms to be sent/received.

Also, keep track on where your income is coming from.

For a single year, it should not be difficult to know where you worked, who paid you $$ to work, where your banks & brokers are, etc.

 

[Soundmanred]

Question for a friend (just so you know it's unrelated to my previous personal question).
She owes around $3500 and wants to make payments to the IRS instead of a lump sum, which she doesn't have. (Yes, I told her to withhold more! "But I want a bigger paycheck!" Now she's paying for that.)
What kind of payment plans do they have? Monthly, quarterly? Any info would be appreciated!

 

[EagleKeeper]

Originally posted by: Soundmanred
Question for a friend (just so you know it's unrelated to my previous personal question).
She owes around $3500 and wants to make payments to the IRS instead of a lump sum, which she doesn't have. (Yes, I told her to withhold more! "But I want a bigger paycheck!" Now she's paying for that.)
What kind of payment plans do they have? Monthly, quarterly? Any info would be appreciated!

She can request for the IRS to setup a payment schedule.

If she defaults, they may garnish the wages

 

[Soundmanred]

OK, thanks.
I guess there's no way to tell what the payments/schedule might be in advance or how long the payout period might be.
By defaults, you mean she doesn't pay in full by the end date, correct?

 

[EagleKeeper]

Originally posted by: Soundmanred
OK, thanks.
I guess there's no way to tell what the payments/schedule might be in advance or how long the payout period might be.
By defaults, you mean she doesn't pay in full by the end date, correct?

Payment Plans - Installment Agreements

 

[Capitalizt]

Question: I filed yesterday, and today I got an interest form from an account I had forgotten about. Basically, I didn't report $40 in interest on my tax form. So I will end up owing $6 more to the IRS ($40 x 15% = $6)

I asked my tax guy and he said the IRS would eventually catch it and send me a notice/bill. I've gotten in trouble for failure to file before and really don't want to be on their bad side again.. Is it ok to mail a check for $6 to the IRS, along with my social security number? Or do I need to go through the hassle of filing an ammended return?

Any advice appreciated.

 

[EagleKeeper]

Originally posted by: Capitalizt
Question: I filed yesterday, and today I got an interest form from an account I had forgotten about. Basically, I didn't report $40 in interest on my tax form. So I will end up owing $6 more to the IRS ($40 x 15% = $6)

I asked my tax guy and he said the IRS would eventually catch it and send me a notice/bill. I've gotten in trouble for failure to file before and really don't want to be on their bad side again.. Is it ok to mail a check for $6 to the IRS, along with my social security number? Or do I need to go through the hassle of filing an ammended return?

Any advice appreciated.

Paperwork must be complete

 

[Ramma2]

Originally posted by: EagleKeeper

Originally posted by: Ramma2
First thanks for doing this thread each year!

My question: We paid about $1500 in 2007 to send my 5 year old to all day kindergarten. From what I gather from TurboTax, it looks like we can't claim that as an education expense, because it is not a higher education.

Is that true? If so why does that suck so very very much?

The daycare does not fall under the higher education credits - key word, HIGHER EDUCATION.

However, if you and your wife worked, there is a child care credit that you can take.
Tax S/W will ask if you had day care expenses for a dependent.
If so, you select the dependent, enter the tax id of the provider, address and amount paid.
The credit is a sliding scale.

This wasn't for his daycare, that is a seperate charge and yeah we claim that as a child care expense. I was asking about tuition to send him to all day kindergarten. Currently our school district only requires half day, and the parents have to pay an additional $2200 or so to to send him to full day school. Is that an education expense?

 

[EagleKeeper]

Originally posted by: Ramma2

Originally posted by: EagleKeeper

Originally posted by: Ramma2
First thanks for doing this thread each year!

My question: We paid about $1500 in 2007 to send my 5 year old to all day kindergarten. From what I gather from TurboTax, it looks like we can't claim that as an education expense, because it is not a higher education.

Is that true? If so why does that suck so very very much?

The daycare does not fall under the higher education credits - key word, HIGHER EDUCATION.

However, if you and your wife worked, there is a child care credit that you can take.
Tax S/W will ask if you had day care expenses for a dependent.
If so, you select the dependent, enter the tax id of the provider, address and amount paid.
The credit is a sliding scale.

This wasn't for his daycare, that is a seperate charge and yeah we claim that as a child care expense. I was asking about tuition to send him to all day kindergarten. Currently our school district only requires half day, and the parents have to pay an additional $2200 or so to to send him to full day school. Is that an education expense?

It will still fall under the dependent care. Someone to supervise the child while both you and your wife work. You will have to get the tax id number from the provider.

The tuition credits are for those in higher education.

 

[Kroze]

I've sold & bought mutual funds in 2007 and got the statement from Fidelity and I don't know how to file it or whether to put it in my tax return at all.

On the statement it said:

Short-Term Realized gain/loss ------------ $3,548.93
Long-Term Realized gain/loss ------------- $1,763.20

It also said that it's not reported to the IRS and it is provided for my assistance in tax return preparation...???